Montana Heat Pump Rebates & Incentives (2026)
Montana's heat pump incentive landscape is limited in 2026. Federal tax credits expired, and the IRA-funded HEAR and HOMES rebate programs remain paused at the state level. NorthWestern Energy offers $450 per air-source heat pump and up to $3,000 for heat pump water heaters replacing an electric water heater, while BPA-funded cooperatives in western Montana provide $600–$1,560 for qualifying systems. This guide covers all major Montana heat pump incentives available in 2026, including NorthWestern Energy rebates, electric cooperative programs, Bozeman's local rebate, state financing, and HEAR/HOMES status. Here's what's actually available.
Updated and sources last checked September 22, 2026
Rates and program availability may change after this date.
Montana
Limited / Region-Dependent
NorthWestern Energy offers $450 per air-source heat pump (Aug 2026–Jun 2027 cycle) and up to $3,000 for a heat pump water heater replacing an electric water heater. Cooperatives pay more: Flathead Electric $600–$1,560 for variable-speed systems, Missoula Electric $1,400–$1,800 for HPWHs. Bozeman adds $500 for HPWHs; Missoula County’s rebate closed in 2025. Federal 25C/25D expired Dec 2025 and Montana’s geothermal credit was repealed. HEAR and HOMES have not launched.
Sources:
Short Version
✓ NorthWestern Energy Rebates
$450 per air-source heat pump (ducted or ductless) through NWE's E+ program, and up to $3,000 for a heat pump water heater that replaces an existing electric water heater. The current E+ cycle covers work from August 1, 2026 through June 30, 2027.
✓ BPA Cooperative Rebates
Western Montana cooperatives offer $600–$1,560 for variable-speed air-source heat pumps (Flathead Electric) and $1,400–$1,800 for heat pump water heaters (Missoula Electric). Amounts depend on the home's existing heating system.
✓ Total Potential Savings
$450–$1,560 for air-source heat pumps depending on utility territory. The strongest heat pump water heater stack is in Bozeman: NWE's up to $3,000 plus the city's $500 reaches $3,500 for homes replacing an electric water heater.
✗ Federal Tax Credits Expired
Section 25C ($2,000/year for heat pumps) and Section 25D (30% for geothermal) both expired December 31, 2025 under the One Big Beautiful Bill Act. No replacement credits exist.
⚠ HEAR & HOMES Programs Not Yet Launched
Montana DEQ's HEAR (up to $8,000 per heat pump; requires existing electric equipment or new construction) and HOMES (up to $8,000 for whole-home projects) IRA rebate programs remain unlaunched. DOE issued initial revised program guidance on June 1, 2026; DEQ says it will revise and resubmit its application once DOE's full updates arrive. No launch date has been announced. Do not count on these programs when budgeting a 2026 installation.
Federal Tax Credits Have Expired
The Section 25C Energy Efficient Home Improvement Credit (up to $2,000/year for heat pumps) and the Section 25D Residential Clean Energy Credit (30% of geothermal heat pump costs with no cap) both expired December 31, 2025. The One Big Beautiful Bill Act accelerated these expirations from their original 2032 sunset. Equipment must have been fully installed and operational by December 31, 2025 to qualify — purchasing or signing a contract in 2025 is not sufficient if installation slipped into 2026. Full details on the federal credit expiration →
The surviving federal programs are the HEAR and HOMES point-of-sale rebates, which Congress preserved in the One Big Beautiful Bill. However, these are direct rebates administered at the state level — and Montana's programs have not yet launched.
HEAR & HOMES IRA Rebates — Paused in Montana
The Montana Department of Environmental Quality (DEQ) Energy Bureau is the designated administrator for both IRA rebate programs. DEQ submitted its implementation application to the U.S. Department of Energy in November 2024, but program design was paused in February 2025 to allow DOE to formulate updated guidance. DOE issued initial revised program guidance on June 1, 2026, and DEQ plans to revise and resubmit its application once DOE's complete updates arrive. No launch date has been announced.
Home Electrification and Appliance Rebates (HEAR)
When launched, HEAR would provide point-of-sale rebates at these federal maximum amounts. Under DOE Program Notice 26-2, the heat pump amounts require existing electric equipment or new construction:
| Measure | Maximum Rebate |
|---|---|
| Heat pump (HVAC) | $8,000 |
| Heat pump water heater | $1,750 |
| Electric panel upgrade | $4,000 |
| Electric wiring | $2,500 |
| Insulation, air sealing, ventilation | $1,600 |
| Household cap (all categories) | $14,000 |
HEAR eligibility is income-based: households at or below 80% of Area Median Income (AMI) receive rebates covering 100% of project costs (up to caps). Households at 80–150% AMI receive 50% coverage. Households above 150% AMI are not eligible for HEAR.
Under DOE Program Notice 26-2 (effective May 29, 2026), replacing a gas, propane, or oil heating system no longer qualifies for HEAR, and a program that hasn't launched must align with this before it opens. Eligibility now turns on new construction or on the home's existing heating equipment already being electric — replacing electric resistance heat with a heat pump is the clearest qualifying case. Programs differ on whether replacing an existing heat pump counts, so confirm with yours before committing. The notice also requires a home to use rebates for insulation and air sealing before a heating or cooling upgrade, unless it already meets a state-specified level. Fuel-switching projects can still route to HOMES, which sets no fuel condition.
Home Efficiency Rebates (HOMES)
HOMES provides whole-house performance-based rebates tied to measured or modeled energy savings. For households at or below 80% AMI, rebates reach $4,000 for 20–34% energy reduction and $8,000 for 35%+ reduction. Above 80% AMI, those figures drop to $2,000 and $4,000 respectively. Unlike HEAR, HOMES is available to all income levels but requires a whole-house energy assessment.
⚠ Do Not Budget Around These Programs
Both HEAR and HOMES remain in "pended" status with DOE. Montana DEQ cannot access funds or begin operations until federal approval is granted. There is no announced timeline. Plan your 2026 installation around currently available utility rebates only.
Utility Rebate Programs
NorthWestern Energy (Largest Utility)
NorthWestern Energy's E+ Residential Electric Existing Home program (Form 3743) runs August 1, 2026 through June 30, 2027. Work completed or materials purchased before August 1, 2026 do not qualify, and projects must be completed and submitted by June 30, 2027. Available to NWE residential electric customers in existing homes; funds are first-come, first-served.
| Measure | Rebate | Key Requirement |
|---|---|---|
| Central heat pump (ducted or ductless) | $450/unit | ENERGY STAR or SEER2 ≥ 15.2, HSPF2 ≥ 8.5 |
| Heat pump water heater | Up to $3,000 | NEEA Tier 3 or 4; must replace an existing electric water heater; participating contractor with pre-approval |
The ASHP rebate applies identically to ducted and ductless systems — NWE does not differentiate. No cold-climate-specific adder, income-qualified tier, or refrigerant requirement exists. The HPWH program is a separate NWE program run with Evergreen Energy Partners. It requires pre-approval through a participating contractor and is limited to existing single-family or manufactured homes (on a permanent foundation) that currently have an electric water heater. Natural gas water heater replacements, rentals, multifamily homes, and self-installs do not qualify, and one incentive is available per residence. New construction does not qualify for the E+ heat pump rebate; for the HPWH program it is considered case by case.
Montana-Dakota Utilities (Eastern Montana)
MDU, which serves eastern Montana including parts of the Billings area, does not offer any heat pump rebates. MDU's residential programs are limited to $300 for high-efficiency natural gas furnaces, $60 for Wi-Fi thermostats, and LED lighting rebates. This is a significant gap for the roughly 70,000+ households in MDU's Montana service territory.
Electric Cooperatives
Montana's electric cooperatives run their own rebate programs, and several in western Montana offer more generous heat pump rebates than NorthWestern Energy. These programs are exclusive to cooperative members, and amounts depend on the home's existing heating system.
| Cooperative | ASHP Rebate | HPWH Rebate | Notes |
|---|---|---|---|
| Flathead Electric (Kalispell) | $600–$1,560 (variable-speed) | Available | Variable-speed only, except $1,250 for a single-stage unit replacing an electric forced-air furnace; qualified installer required; 3% on-bill financing |
| Missoula Electric | $920 | $1,400–$1,800 | Ductless, electric-heat homes only (not gas), one per home, licensed HVAC contractor; income-qualified program for households ≤ 200% FPL or meeting state/tribal low-income criteria |
| Yellowstone Valley Electric (Billings area) | $200/ton, up to $800 | — | Add-on heat pump paired with an existing furnace; also $200/ton up to $1,000 for geothermal; claim within 90 days of purchase |
| Lower Yellowstone Rural Electric (Sidney) | $150/ton | — | All heat pump types |
Other cooperatives, such as Ravalli Electric Cooperative (Victor), may offer rebates; contact them directly at (406) 961-3001.
City & County Programs
Bozeman offers a local heat pump water heater rebate that stacks with utility incentives. Missoula County's rebate, which also stacked, closed in October 2025.
City of Bozeman — $500 HPWH Rebate
Bozeman offers a $500 rebate for qualifying electric heat pump water heaters, plus $75 for completing a satisfaction survey after installation. It is open to City of Bozeman water customers, and equipment must be on NEEA's Residential HPWH Qualified Products List. For NWE customers replacing an electric water heater through a participating contractor, this stacks with NorthWestern Energy's up to $3,000 HPWH rebate for a combined total of up to $3,575.
Missoula County — Rebate Closed
Missoula County's heat pump water heater rebate closed in October 2025 after all funds were allocated. Missoula Electric Cooperative members can still get $1,400–$1,800 from the co-op for a heat pump water heater that replaces an existing electric storage water heater, and NWE electric customers in the county can use NWE's up to $3,000 program.
HPWHs Are Montana's Best Incentive Opportunity
Heat pump water heaters are the one category where Montana incentives can cover most or all of the installed cost — if the home already has an electric water heater. A typical HPWH costs $1,500–$3,500 installed. NWE's up to $3,000 (plus Bozeman's $500 for city water customers) or Missoula Electric's $1,400–$1,800 can make the equipment close to free. Homes with a gas water heater do not qualify for NWE's program.
How Programs Stack
Utility rebates stack freely with local city/county programs and (when launched) with HEAR or HOMES. HEAR and HOMES cannot cover the same measure in the same home, and total rebates cannot exceed total project cost. Below are realistic stacking scenarios for a typical $18,000 whole-home cold-climate ducted heat pump installation in NorthWestern Energy territory. The HEAR figures below assume the home already heats with electricity (for example, baseboard or an electric furnace); under DOE Program Notice 26-2, replacing a gas, propane, or oil system no longer qualifies for HEAR, though it can still route to HOMES.
Above 150% AMI — Ducted Cold-Climate ASHP
- Federal tax credits: $0 (expired)
- HEAR: $0 (income-ineligible)
- HOMES (if launched, 35%+ savings): up to $4,000
- NWE utility rebate: $450
Current realistic maximum: ~$450
Future potential if HOMES launches: ~$4,450
80–150% AMI — Ducted Cold-Climate ASHP
- Federal tax credits: $0 (expired)
- HEAR (50% of cost, capped at $8,000; requires existing electric equipment or new construction): up to $8,000
- NWE utility rebate: $450
Future potential if HEAR launches: ~$8,450
Current available: $450 only
Below 80% AMI — Ducted Cold-Climate ASHP (Best Case)
- Federal tax credits: $0 (expired)
- HEAR (100% of cost, capped at $8,000; requires existing electric equipment or new construction): $8,000
- NWE utility rebate: $450
- WAP (if eligible): weatherization measures chosen by an energy auditor; heat pump not guaranteed
Future potential if HEAR launches: $8,450+
Current available: $450, plus WAP weatherization if eligible
What You'll Actually Pay Today
Until HEAR and HOMES launch, most Montana homeowners will pay $16,440–$17,550 out of pocket for a typical $18,000 ducted cold-climate heat pump installation (after the $450–$1,560 utility rebate depending on territory). The exception: heat pump water heaters replacing an electric water heater, where NWE's or Missoula Electric's rebate (plus Bozeman's in Bozeman) can cover most or all of the installed cost.
Montana has no state heat pump tax credit. Its former geothermal system credit was repealed by the 2021 Legislature and cannot be claimed for tax years after 2021. The Alternative Energy Revolving Loan Program (3.5% fixed, up to $40,000) covers geothermal and solar systems, plus efficiency measures installed alongside them.
State Programs & Assistance
Montana Weatherization Assistance Program (WAP)
Administered by DPHHS through local community action agencies (most of them Human Resource Development Councils), the WAP provides energy efficiency upgrades for income-qualifying households. Eligibility is based on income at or below 200% of the federal poverty level and on resource limits; households receiving SNAP, SSI, or TANF may qualify automatically, and renters can apply. Applications are accepted year-round. An energy auditor decides which measures are cost-effective for the home, and a heat pump is not guaranteed.
Montana Geothermal Tax Credit — Repealed
Montana's geothermal system credit (Form ENRG-A, up to $1,500) was repealed by the 2021 Legislature and cannot be claimed after tax year 2021; only carryforwards from earlier installations remain. Some utility and third-party pages still mention it. For a ground-source system today, the options are cooperative rebates (such as Yellowstone Valley Electric's $200 per ton, up to $1,000) and the AERLP loan below.
Alternative Energy Revolving Loan Program (AERLP)
This DEQ-administered program offers 3.5% fixed interest loans up to $40,000 with a 10-year maximum term and no down payment. Ground-source heat pumps qualify directly. Air-source heat pumps may qualify only when installed alongside a qualifying alternative energy system (such as solar). Applications are accepted quarterly (January, April, July, and October windows) and are scored competitively — demand has exceeded available funds each quarter since April 2023.
⚠ Common Mistake: Assuming AERLP Covers Air-Source Heat Pumps
The Alternative Energy Revolving Loan Program primarily funds geothermal and solar projects. A standalone air-source heat pump installation typically does not qualify unless paired with a qualifying alternative energy system. Contact AERLP staff at (406) 444-6586 or (406) 444-6465 before applying.
Montana Climate & Heat Pump Performance
Montana sits firmly in cold-climate heat pump territory. Every major city falls well below the 5°F threshold used by ENERGY STAR's Cold Climate Heat Pump specification. Equipment selection matters — cold-climate certification is strongly recommended, and most installers recommend dual-fuel setups pairing a heat pump with a gas furnace for the coldest 5–15 days per year.
| City | ASHRAE 99% Design Temp | Annual Heating Degree Days |
|---|---|---|
| Billings | -10°F | 7,049 |
| Missoula | -6°F | 8,125 |
| Great Falls | -15°F | 7,750 |
| Helena | -16°F | 8,129 |
| Bozeman | ~-14°F | ~7,900 |
Roughly 59% of Montana homes heat with natural gas, 24% with electricity, and 9–14% with propane. Montana residential natural gas prices average about $7.88/Mcf — well below the national average — which weakens the operating-cost case for switching from gas to heat pump. The strongest economic case exists for the estimated 40,000+ households heating with propane or electric resistance, where heat pump conversion delivers immediate savings.
✓ Best Candidates for Heat Pumps in Montana
Homes currently heating with propane or electric resistance (baseboard, wall heaters, electric furnaces). Households served by BPA-funded cooperatives with higher rebates. Homes replacing an electric water heater in NWE or Missoula Electric territory, where a heat pump water heater can cost little or nothing after rebates. Homeowners with existing ductwork who want efficient cooling in addition to heating.
For equipment selection, look for HSPF2 ratings of 9.0 or higher and cold-climate certification. Models from Mitsubishi (Hyper-Heat), Daikin, Carrier (Greenspeed), and Bosch operate down to -13°F to -22°F. For more on how a heat pump fits with home battery storage, see our battery guide.
How to Apply
The process depends on your utility. Here's the path for NorthWestern Energy customers, which covers the largest share of Montana households:
Check your utility
Confirm whether you're an NWE electric customer, an electric cooperative member, or an MDU customer. This determines which rebates are available to you. Co-op members should contact their cooperative directly.
Choose qualifying equipment
For NWE's ASHP rebate: ENERGY STAR certified or SEER2 ≥ 15.2 and HSPF2 ≥ 8.5. For the HPWH program: NEEA Tier 3 or 4 equipment through a participating contractor. Cold-climate certification is strongly recommended for Montana's temperatures.
Install and submit
Have the system installed by a licensed contractor. Submit the NWE E+ rebate application (Form 3743) with a recent NWE bill and itemized receipts; projects must be completed and submitted by June 30, 2027. For HPWH, your participating contractor handles the rebate process.
Stack local rebates if eligible
Bozeman water customers: apply separately through the city's HPWH rebate program, using NEEA-listed equipment. Missoula Electric members: use the co-op's rebate forms. Yellowstone Valley Electric members: claim rebates within 90 days of purchase.
What to Watch
Montana DEQ HEAR/HOMES Launch
Montana's HEAR and HOMES programs could add $4,000–$8,000 in rebates for eligible households; under DOE Program Notice 26-2, HEAR will require existing electric equipment or new construction. DOE issued initial revised guidance on June 1, 2026, and DEQ must revise and resubmit its application before launch. No timeline has been announced.
IRA Funding Runway
Congress preserved HEAR and HOMES funding in the One Big Beautiful Bill, but the political environment for clean energy spending remains uncertain. Future legislation could modify program terms, funding levels, or eligibility criteria.
NWE E+ Program Cycle (Through June 30, 2027)
NorthWestern Energy's E+ existing-home rebates run from August 1, 2026 through June 30, 2027. Work done or materials bought before August 1, 2026 do not qualify, and funds are first-come, first-served. Amounts may change in the next program year.
MDU Program Expansion
Montana-Dakota Utilities is the notable gap in Montana's utility rebate landscape. Watch for program changes — MDU could add heat pump rebates as equipment efficiency improves and cold-climate adoption grows in eastern Montana.
Frequently Asked Questions
What heat pump rebates are available in Montana in 2026?
Montana heat pump rebates in 2026 come primarily from utilities. NorthWestern Energy offers $450 per air-source heat pump and up to $3,000 for a heat pump water heater that replaces an existing electric water heater. BPA-funded cooperatives like Flathead Electric offer $600–$1,560 for variable-speed air-source systems. Bozeman offers a $500 heat pump water heater rebate; Missoula County's rebate closed in October 2025. Federal tax credits under Sections 25C and 25D expired December 31, 2025, and Montana repealed its geothermal tax credit after 2021. Montana's HEAR and HOMES IRA rebate programs have not yet launched.
Can I stack NorthWestern Energy rebates with HEAR or local rebates in Montana?
Yes. Utility rebates from NorthWestern Energy or cooperatives can stack with local rebates. A Bozeman NWE customer replacing an electric water heater could combine NWE's up-to-$3,000 heat pump water heater rebate with Bozeman's $500 rebate for up to $3,500 in rebates ($3,575 with Bozeman's survey payment). Missoula County's heat pump water heater rebate closed in October 2025. When HEAR launches, it will also stack with utility and local rebates for income-qualifying households, but under DOE Program Notice 26-2 it will require existing electric equipment or new construction.
Do heat pumps work in Montana winters?
Yes, but equipment selection matters. Montana's ASHRAE design temperatures range from -6°F in Missoula to -16°F in Helena, well below the 5°F threshold for ENERGY STAR Cold Climate certification. Modern cold-climate models from Mitsubishi, Daikin, and Carrier operate down to -13°F to -22°F but experience 30–50% capacity loss at extreme temperatures. Most Montana installers recommend dual-fuel setups pairing a heat pump with a gas furnace for the coldest days.
Who administers Montana's HEAR and HOMES programs?
The Montana Department of Environmental Quality (DEQ) Energy Bureau is the designated administrator for both the HEAR and HOMES IRA rebate programs. DEQ submitted its implementation application to the U.S. Department of Energy in November 2024. Program design was paused in February 2025 pending updated DOE guidance. DOE issued initial revised program guidance on June 1, 2026; DEQ says it will revise and resubmit its application once DOE's complete updates are available, and no launch date has been announced.
Does Montana-Dakota Utilities offer heat pump rebates?
No. Montana-Dakota Utilities (MDU), which serves eastern Montana including parts of the Billings area, does not offer any heat pump rebates as of 2026. MDU's residential programs are limited to $300 for high-efficiency gas furnaces, $60 for Wi-Fi thermostats, and LED lighting rebates. Billings-area homeowners on Yellowstone Valley Electric Cooperative can access $200 per ton, up to $800, for add-on heat pumps paired with an existing furnace, claimed within 90 days of purchase.
Sources
- Montana DEQ — Home Energy Rebates Program
- NorthWestern Energy — E+ Existing Home Electric Rebates (Form 3743, 2026–27)
- NorthWestern Energy — HPWH Program
- NorthWestern Energy — HPWH Program FAQ
- Flathead Electric Cooperative — Air Source Heat Pumps
- Flathead Electric Cooperative — Heat Pump Water Heaters
- Missoula Electric Cooperative — Ductless Heat Pumps
- Missoula Electric Cooperative — Heat Pump Water Heaters
- Missoula Electric Cooperative — Income-Qualified Rebate Program
- Yellowstone Valley Electric — Add-on Heat Pump Rebate
- Yellowstone Valley Electric — Geothermal Heat Pump Rebate
- Lower Yellowstone REC — Rebates
- Montana-Dakota Utilities — Residential Rebates
- City of Bozeman — HPWH Rebate
- Missoula County — Energy Efficiency Rebates (closed Oct 2025)
- Montana DEQ — Alternative Energy Revolving Loan Program
- Montana DOR — Geothermal System Credit (Repealed)
- Montana DPHHS — LIHEAP & Weatherization Assistance
- LIHEAP Clearinghouse — Montana Profile
- IRS — 25C/25D Termination FAQ
Disclaimer: This page covers the main statewide, utility, and IRA heat pump incentives available to Montana homeowners in 2026. It does not calculate savings, guarantee eligibility, or represent any incentive program. Cooperative rebate amounts vary by territory and may change without notice. We verify status regularly but programs can change without notice. Always confirm current amounts and eligibility with NorthWestern Energy, your electric cooperative, Montana DEQ, and your contractor before making decisions.
See how this state compares → Heat Pump Rebates by State (2026)